Option play on Aug 16 BPMC expiration

A

arturo100

Yesterday, I observed a heavy option play on the Aug 16 BPMC expiration:

- sold 1500 CALL 105 @3.83 (-$574,500)
- bought 3000 CALL 115 @1.5 (+$450,000)
- bought 1500 CALL 125 @1.05 (+$157,500)

As the OI on these options was very low, this must be a fresh position. Summing up, he has spent $33,000 to set up this position, so he is not expecting just a plain drop in IV. Also, I didn't observe any concomitant, unusual transaction on the underlying. Then, what was the purpose of this trade?
 
arturo100 said:
Yesterday, I observed a heavy option play on the Aug 16 BPMC expiration:

- sold 1500 CALL 105 @3.83 (-$574,500)
- bought 3000 CALL 115 @1.5 (+$450,000)
- bought 1500 CALL 125 @1.05 (+$157,500)

As the OI on these options was very low, this must be a fresh position. Summing up, he has spent $33,000 to set up this position, so he is not expecting just a plain drop in IV. Also, I didn't observe any concomitant, unusual transaction on the underlying. Then, what was the purpose of this trade?
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Looks a bit like something I would do. Just mine would have fewer 115's and more 125's.
I personally do not like the "what is this person trying to do as it ignores what they might have on, but this is clearly a very bullish trade. You want the market higher by a lot, and for that to happen fast. Hopefully with vol exploding. Otherwise you slowly buy back in the 105's if the market sits. Or kick out some of those 125's to cover your premium outlay... Then slowly buy back in the 105's.... or...

I also would not think this constitutes a "heavy" play.

...all comments above should be taken superficially. I have not extended a molecule of energy to look at anything other than current underlying price...

-Regards
 
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If you saw this on time and sales, why do you assume that he sold 1500 and then bought 3000 and 1500? I think it is far more likely that he just put on a butterfly, where he bought 1500, sold 3000 and bought 1500. This would give him the 105/115/125 butterfly for 1.88
 
Indeed I saw it on a T&S. I assume it went this way because exchanges were closer to the bid or to the ask in my interpretation. But spreads were pretty big, so it could well be you are right.
 
I think it is how FSU says. Only on a double take did I realize you were saying it wasn't. The original structure would be odd. The B-Fly would be normal.
 
Wheezooo said:
I think it is how FSU says. Only on a double take did I realize you were saying it wasn't. The original structure would be odd. The B-Fly would be normal.
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Thanks to both of you. So in this case, is this still a bullish trade?
 
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